Glencore profit plunges on lower commodity prices, but investors get special dividend

• For more financial news, go to the News24 Business front page

Mining and trading giant Glencore has taken a big profit hit as commodity prices, particularly coal and gas, normalised from elevated levels seen in the wake of Russia's invasion of Ukraine.

Headline earnings fell almost 60% to about $4.28 billion (R80.4 billion) in the six months to end-June, with revenue falling 20% to $107.4 billion. This followed "extreme global geopolitical and economic turbulence" in 2022, which pushed prices for many coal and gas benchmarks to record levels.

Against the backdrop of "a normalisation of commodity market imbalances and volatility, primarily across the energy spectrum", Glencore said its marketing and industrial segments still posted a healthy earnings performance, although notably lower compared to the record performance in 2022.

Core profit in its marketing business more than halved, but the group said this was still a strong performance in the context of the past ten years, given the volatility of global conditions.

Glencore's marketing business involves commodity trading, sourcing commodities from suppliers and selling them to international customers.

"The strength of our diversified business model across industrial and marketing, focusing on metals and energy, has again proved itself adept in a range of market conditions," said Glencore CEO Gary Nagle in the results.

The business remains highly cash generative, allowing the group to also announced "top-up" returns to shareholders of $2.2 billion, comprising $1 billion in a special dividend and $1.2 billion in share buy backs.

"As the world moves towards a low-carbon economy, we remain focused on supporting the energy needs of today whilst investing in our transition metals portfolio," said Nagle, noting that over the past year the group has committed $1.25 billion to this aim. This includes purchasing the balance of the large, long-life MARA copper project in Argentina and acquiring a minority stake in Alunorte, a world-class alumina refinery in Brazil.

Shares of Glencore, which is valued at almost R1.6 trillion on the JSE, were down 2% in morning trade on Tuesday but have still increased almost 14% over the past one year.